Lord Drayson: My right honourable friend the Minister of State for the Armed Forces (Adam Ingram) has made the following Written Ministerial Statement.
	As part of our normal process of keeping force levels under review, the General Officer Commanding Northern Ireland (GOC NI), in consultation with the Secretary of State for Northern Ireland and Chief Constable of the Police Service Northern Ireland (PSNI), has concluded that the remaining roulement battalion can be removed from his command as it is not required for routine support to the police in Northern Ireland. This follows a rundown in the requirement such that the tasks currently performed by this battalion can be delivered instead by resident battalions. Accordingly, the battalion known as Northern Ireland Battalion 1 (NIBAT 1) can be removed from the command of the GOC NI to Commander-in-Chief Land on the 16. January 2006.
	This is a prudent measure to provide military support to the police efficiently and does not reflect the Army's ability to support the PSNI in countering the threat from terrorism and preventing potential public disorder. We will continue to keep force levels in Northern Ireland under regular review to match the support required by the PSNI.

Lord Triesman: As presidency of the European Union, Her Majesty's Government are today circulating to all member states of the European Union for discussion comprehensive proposals for the European Union budget in the next financial period 2007–13 inclusive. Copies of the proposal are available in the Library of the House and in the Printed Paper Office.
	This Written Ministerial Statement outlines the context of the proposal.
	These budget proposals have four policy objectives:
	The first is tough budget discipline. They are below the level proposed by the Luxembourg presidency in June and 17 per cent below the level proposed by the Commission.
	Secondly, they help the new member states in the enlarged EU by building their economies and societies, and they more fairly distribute the costs among the better-off nations. The UK is offering an extra contribution to these costs of enlargement amounting to €8 billion over the budget period.
	Thirdly, these proposals keep the rebate. Indeed, the rebate will rise from an annual average over recent years of €5 billion to around 7 billion.
	Fourthly, these proposals ensure there can be no fundamental change in the rebate without fundamental reform of the common agricultural policy. All spending, including on agriculture, will be subject to a review during the coming budget period.
	Let me explain in more detail.
	The budget overall
	Last year the Commission proposed a budget of €1,025 billion, or 1.24 per cent of the total national income of all member states ("GNI"). We said all along that this was far too high. There would be no chance of any serious budgetary reform in specific areas without strong downward pressure overall. Given this, and the demand of the six "budget disciplinarians" (France, Germany, Sweden, Austria, Netherlands and UK), the Luxembourg presidency reduced its proposed budget to 1.06 per cent, or €871 billion. This latest proposal would further reduce the budget to €847 billion (or 1.03 per cent on the commitments basis) and by the end of the budget period spending will be below the 1 per cent level the six had proposed. This would be a major achievement.
	It is important to see these proposals in a longer-term context. EU spending hit 1 per cent of GNI in 1985 and rose rapidly under Baroness Thatcher and Sir John Major as a proportion of national income, by a quarter to 1.25 per cent by the early 1990s. And it started to come down only in 1998. These proposals would bring it down further.
	Enlargement
	The new member states will receive €150 billion in structural and cohesion funding. That is an enormous amount and would represent very large new funds. Total funding through all EU programmes to the 10 new member states is worth twice the Marshall Plan which funded the reconstruction of Western Europe nearly 60 years ago (*at today's prices).
	And we are ensuring that these countries will be able to spend much more of what they have been allocated. This is a very important point because the record shows that year by year both the existing and new member states have not been able to spend their full allocation for many technical reasons. We have included a series of very practical changes to ensure that they are better able to do so. This means that while headline entitlements are lower by €14 billion than in the June proposals, we are confident that all these countries will be better able to spend what they have been allocated. And we are proposing strengthened financial management arrangements.
	Under our proposals, for example, Hungary would receive €22 billion in structural and cohesion funding the Czech Republic €23 billion and Poland €56 billion.
	Of course there are those who ask why our taxpayers in western Europe should pay for roads, railways and other reconstruction projects in the east. The answer is that all enlargements have benefited all members economically by increasing the total volume of EU trade, investment and jobs in which all have a share. British trade with the new member states has already increased by 400 per cent since 1990, ten times the rate of growth with the rest of the world. That is an indication of the economic potential we will be helping to unlock by making this investment in Europe's future. It is very much in Britain's national interest for the world's largest single market to grow and become more prosperous. And the benefits of enlargement are not just economic. It must be in Britain's interest to have increasingly stable societies in eastern Europe.
	The UK contribution
	As I have spelt out, and as these proposals make clear, the UK Government recognise their responsibility to pay a fair contribution to the cost of enlargement—an historic project supported across the political divide. It has been a strategic objective of successive British governments and, happily, has enjoyed very active all-party support. The opposition parties have called for significant increases in structural and cohesion funding in central and eastern Europe. This budget delivers that objective. But it has to be paid for. We are all prepared to pay our fair share, but no more than our fair share.
	As EU spending shifts from older member states to the new, the British contribution will inevitably rise, along with the contributions of all the EU 15 member states. But the proposals tabled by the Luxembourg presidency would have left us with a bill of more than €20 billion over and above the €50 billion that would be our contribution under existing arrangements. That was not acceptable then, nor is it now. The proposal we have tabled today will take our contribution to €58 billion over the seven-year period of the budget.
	This is the equivalent of halving the value of the rebate in respect of structural and cohesion funding in the ten new member states. This could be achieved either by not applying the rebate to a proportion of structural and cohesion funding in the new member states, or by a technical route to increasing our gross contributions.
	The UK will in any event continue to receive the full value of the rebate as it applies to the Europe of 15, and to all CAP spending throughout the union. And the rebate will rise, because it increases in proportion to our net contribution. The rebate will increase from an annual average of €5 billion in the current financial period, to around €7 billion.
	The rebate was negotiated in 1984, but it did not prevent a very significant rise in the EU's take of member states' national income. Nor did it deal with the underlying problem which made the rebate necessary. And it did not prevent the UK paying twice as much as France and Italy, countries with similar sized economies. With these proposals today, Europe's spending comes down as a proportion of income. And for the first time since the UK joined 30 years ago, we would pay roughly the same as France and Italy as a share of national income.
	Reform
	This is a budget which seeks to invest in Europe's future, and not only through enlargement.
	Our proposals provide for a comprehensive and wide-ranging review, covering all aspects of revenue and expenditure, including agriculture. This will be conducted by the Commission, which will submit a report in 2008. On the basis of the review, the EU would be able to make changes in the 2007–13 financial period.
	Conclusion
	We have always made clear that our overall aim is to secure fundamental reform of spending which would remove the underlying justification for the rebate. The mechanism we propose for a review both of revenue and expenditure undertaken by the Commission would put us on a pathway to a reformed European Union better able to compete in the global economy. The budget we have circulated today is a tough package which recognises the responsibilities of all members of the EU to both pay a fair contribution towards the future well-being of the Union.
	It provides a sound basis on which all our citizens can thrive in an enlarged European Union. A bigger, more prosperous European Union means a stronger, more prosperous Britain. These are good proposals for the UK and good proposals for Europe.

Lord Davies of Oldham: My honourable friend the Parliamentary Under-Secretary of State for Culture, Media and Sport (James Purnell) has made the following Written Ministerial Statement.
	I am pleased to inform the House that I have today formally published the interim report of an independent panel that has been set up to consider whether the licensing fees are set at the right level.
	The panel's terms of reference are to:
	consider whether the fees cover the full cost to licensing authorities;
	identify the scale, extent and nature of any problems encountered by licensees/licence payers and licensing authorities ;
	make recommendations about how the existing fee structure and levels could be developed;
	ensure best practice is being fully realised across all authorities; and
	identify how the regime could be developed to address any other issues including impact of the fee scales on sports clubs, village and community halls.
	While the panel, which includes representatives of local government, local communities and industry, has collectively concluded that it is too early to take a view on the current fee levels associated with the Licensing Act 2003, it has made the following initial recommendations to the Government:
	there should be a central source of information on fees addressed to licence payers, which explains why the system has changed, what the new system does for licence payers and their duties and responsibilities, as well as what licensing authority responsibilities are to licence payers;
	an annual date should be set for the payment of the annual fee with incentives for paying it;
	consideration should be given to simplifying the application process, particularly in relation to advertising applications and clarification of the requirement for "professionally" drawn premises plans; and
	there should be no impediment to licensing authorities making their monitoring, enforcement, and administration more efficient and cost-effective.
	We will now fully consider the panel's recommendations.
	The interim report also identifies areas that the panel will now consider further, including:
	Licensing authority income and costs.
	Licensing authority inspection and enforcement regimes and the variability of Licensing authority approach.
	The model for calculating fees.
	Simplification and number of applications.
	Temporary event notices.
	Not-for-profit groups (including sports clubs and village halls) and events and circuses.
	Large events and festivals.
	The panel is due to publish a final report on the fee levels in the autumn of 2006. Where it is able to do so, it will make further recommendations in advance of its full report.
	I can re-affirm today that costs incurred by local authorities in meeting their requirements under the new Licensing Act will (provided they have been incurred legitimately and efficiently) be fully met by fees within the national fee regime. There should therefore be no liability for the council tax payer because of the new licensing regime. My department and the Local Government Association will work with the independent fees review panel as a matter of urgency to agree the process for verifying these costs.
	Everyone involved in the new fees system can rest assured that, if evidence proves that the current system needs fine-tuning, we are fully committed to doing just that.
	Copies of the report have been deposited in the House Libraries and are available at www.culture.gov.uk.

Lord McKenzie of Luton: My right honourable friend the Paymaster General (Dawn Primarolo) has made the following Written Ministerial Statement.
	I have completed the annual review under Section 141 of the Social Security Administration Act 1992. I propose the following changes to take effect from 6 April 2006. These rates and limits will also apply to national insurance contributions in Northern Ireland.
	Employers and Employees
	In line with the Social Security Contributions and Benefits Act 1992, the lower earnings limit for primary class 1 contributions is to be raised to £84 a week. It is set at the level of the basic state pension for a single person from April 2006 and rounded down to the nearest pound.
	The primary and secondary thresholds for class 1 contributions will continue to be aligned with the weekly amount of the income tax personal allowance, which will be increased to £5,035 from April 2006. The primary and secondary thresholds will therefore be increased to £97 a week. This means that no tax or class 1 contributions will actually be paid on earnings below this level.
	The upper earnings limit for primary class 1 contributions will be raised to £645.
	The self-employed
	The rate of class 2 contributions will be frozen at £2.10 a week.
	Self-employed people with earnings below the annual small earnings exception can apply to be exempted from paying class 2 contributions. This limit will be raised by £120 to £4,465 in line with inflation.
	The annual lower profits limit for liability to class 4 contributions will increase to £5,035 a year (in line with the income tax personal allowance). The upper profits limit will increase by £780 to £33,540, to maintain the link with employees' earnings liable to class 1 contributions.
	Class 3
	The rate of class 3 voluntary contributions will be increased by 20 pence to £7.55 a week.
	Share fishermen
	The special rate of class 2 contributions for share fishermen, which allows them to build entitlement to contributory jobseeker's allowance in addition to the other contributory benefits available to the self-employed, will be frozen at £2.75 a week.
	Volunteer Development Workers
	The special rate of class 2 contributions for volunteer development workers, which entitles them to the full range of contributory benefits, will be increased by 10 pence to £4.20 in line with the statutory formula of 5 per cent of the primary class 1 lower earnings limit.
	Treasury Grant
	I need to ensure that the fund can maintain a prudent working balance throughout the coming year. In accordance with Section 2(2) of the Social Security Act 1993, I propose to do so by prescribing that the maximum treasury grant which may be made available to the fund in 2006–07 shall not exceed 2 per cent of the estimated benefit expenditure for that year. Similar provision will be made in respect of the Northern Ireland National Insurance Fund.
	I shall be laying a draft re-rating order before Parliament in due course. This will accompany a report by the Government Actuary to myself and my right honourable friend the Secretary of State for Work and Pensions which we shall jointly present to Parliament.
	The following table sets out the rates, earnings limits and thresholds for national insurance contributions proposed for 2006–07.
	
		National insurance contributions, proposed re-rating, April 2006
		
			 Item 2006–07 
			 Lower earnings limit, primaryclass 1 £84 
			 Upper earnings limit, primaryclass 1 £645 
			 Primary threshold £97 
			 Secondary threshold £97 
			 Employees' primary class 1 rate 11 per cent from £97.01 to £645plus 1 per cent above £645 
			 Employees' contracted-outrebate 1.6 per cent 
			 Married women's reduced rate 4.85 per cent from £97.01 to £645plus 1 per cent above £645 
			 Employers' secondary class 1rate 12.8 per cent on earnings above£97 
			 Employers' contracted-outrebate, salary-related schemes 3.5 per cent 
			 Employers' contracted-outrebate, money-purchase schemes 1.0 per cent 
			 Class 2 rate £2.10 
			 Class 2 Small earnings exception £4,465 
			 Special class 2 rate for sharefishermen £2.75 
			 Special class 2 rate for volunteerdevelopment workers £4.20 
			 Class 3 rate £7.55 
			 Class 4 lower profits limit £5,035 
			 Class 4 upper profits limit £33,540 
			 Class 4 rate 8 per cent from £5,035 to £33,540plus 1 per cent above £33,540

Baroness Andrews: My honourable friend the Minister for Housing and Planning has made the following Written Ministerial Statement.
	In July 2002 my right honourable friend the Deputy Prime Minister announced that he would be making an additional £350 million available to local authorities over the period 2003–06 to improve the delivery of planning services. Since then, we have announced that the planning delivery grant (PDG) will continue, with a further £255 million being made available in the period to 2008. We have now decided the basis on which we will distribute the development control and enterprise areas allocations of the planning delivery grant of £135 million in 2006–07 and will be informing recipients of their provisional allocations.
	The grant is performance related. Our aim is to enhance the resourcing of the planning system in a way that drives performance improvement and ensures effective delivery of our objectives for sustainable communities. It is specifically targeted towards meeting the Office of the Deputy Prime Minister's public service agreements (PSA) 5 and 6. PSA 5 aims to achieve a better balance between housing availability and demand. PSA 6 requires all authorities to have local development frameworks in place (in accordance with agreed local development schemes) and to meet the best value development control targets by 31 March 2007.
	I can confirm today that the development control allocation is £78 million (57.7 per cent of the total grant), with £71 million going direct to authorities to reward their improvement towards and achievement of best value development control targets in the period October 2004 to June 2005. The assessment is based on three quarterly performance figures this year because the announcement of the first allocation of PDG has been brought forward. It is now in line with other announcements of grant and this will help to increase certainty in local authority budget-setting processes. This allocation will be paid to local planning authorities at a district and county level, national parks, regional planning bodies, the Broads Authority and the Greater London Authority. A provisional £2.2 million is also being made available to authorities with enterprise areas in their boundary.
	This year we have increased the incentive for authorities to meet targets by allocating three-quarters of the overall development control allocation for meeting targets and a quarter for performance improvement. In addition authorities that meet all three targets will receive a bonus of £50,000. The awards will be weighted to take account of workload and performance, and the rewards for meeting the major targets, or improving in this area, will be weighted more significantly.
	For the first time there will be a top slice of £7 million from this development control total, which will be used to support authorities towards meeting the target. We agreed, following a review of development control carried out with the Prime Minister's Delivery Unit, that up to £5 million would be made available to the Planning Advisory Service and ATLAS, the team supporting authorities dealing with large housing applications in the south-east. A top slice of £2 million from this total will be used to reward and incentivise authorities that are proactive in performance management of applications, especially through the use of electronic tracking of applications, and handling of backlogs. I will make a further announcement on what this will entail early in 2006.
	As in previous years, the development control allocations are subject to an abatement related to performance on appeals. Where an authority's performance on appeal is 40 per cent worse than the national average (32.63 per cent of appeals upheld against the authority), 10 per cent of its development control allocation will be abated. Where this performance is 50 per cent worse than the average, this abatement will increase to 20 per cent of the development control allocation. This condition underlines the continuing importance we place on quality in decision-making.
	Grant allocations are not ring-fenced and authorities have complete discretion in the way they spend this money. However, to encourage investment for the future, 25 per cent of the total grant paid to any individual authority must be spent on capital. The remaining 75 per cent can be spent by the local authority on resource or capital budgets.
	The final condition imposed on authorities ensures that the Office of the Deputy Prime Minister has the power to act appropriately to partly withhold payment or recover part or all of grant paid where there are concerns over the accuracy or proven inaccuracies in the information on which allocations were made. I may consider withholding up to 10 per cent of the grant allocated to authorities whose best value performance indicator 109 (BVPI 109) has been qualified by the auditor until we have established to our satisfaction the reason for the qualification and the reliability of the data on which grant was allocated. Following this I may seek to recover some or all of the moneys paid to those authorities.
	Today's announced allocation remains provisional and so remains subject to a final determination of grant which will occur when the second announcement is made.
	The second announcement will cover all other aspects of the grant, including rewards for e-planning (£5.7 million), plan-making (£20.8 million), high housing demand and growth areas (£16 million) and low demand pathfinder areas (£2.5 million). It will also include top slices for the Planning Inspectorate (£2 million), regional planning bodies (£6.5 million), the GLA (£100,000) and a national initiative of planning bursaries (£1.32 million). This second announcement is expected to be made in March 2006. All these figures, along with those for development control and enterprise areas, remain provisional and subject to final determination by Ministers with agreement by Treasury.
	A table showing the provisional amounts payable is available in the Libraries of both Houses. This sets out the details of each recipient's provisional grant allocations for development control and enterprise areas and abatements for poor appeals performance.

Baroness Andrews: My right honourable friend the Minister for Housing and Planning has made the following Written Ministerial Statement.
	This Statement concerns a package of changes to planning policy the Government are announcing today. We are consulting on draft planning policy statement (PPS) 3: Housing, draft planning policy statement (PPS) 25: Flooding and we are publishing a new green belt direction. Copies of these documents will be placed in the Libraries of both Houses.
	Planning Policy Statement (PPS) 3: Housing
	The Government's housing policy aims to deliver a step on the housing ladder for future generations of homeowners, quality and choice for those who rent, and, sustainable, mixed and inclusive communities. To do this, we need the planning system to provide for new homes which are well-designed and built to high environmental standards, in places that are well located, with good access to jobs and key services.
	Draft PPS3, which the Office of the Deputy Prime Minister is publishing today, is a key component of our strategy to deliver more homes where they are needed. It provides a national policy framework for those at regional and local level responsible for developing planning policies. It advocates an evidence-based approach, including the use of sustainability appraisals, in order to ensure that development plans provide a sound framework for deciding planning applications.
	Draft PPS3 introduces important changes in the approach to planning for housing. Planning needs to be more responsive to the housing market, and to take account of affordability alongside the social and environmental impacts of development. It continues the priority for brownfield sites. It attaches high importance to the design and mix of housing that is delivered in new developments to improve the quality of residential environments and contribute to the delivery of sustainable communities.
	New Green Belt Direction
	The Office of the Deputy Prime Minister is also today issuing through a circular to local authorities a new Town and Country Planning (Green Belt) Direction.
	This new direction will come into force on 3 January 2006 and will, for the first time, specifically require planning applications for inappropriate development of certain types and scale in the green belt which local planning authorities are minded to approve to be referred to my right honourable friend the Deputy Prime Minister. The direction will ensure that the Secretary of State has the opportunity to consider whether to call in for public inquiry and his own determination the more significant and potentially most harmful development proposals in the green belt before they can be approved. However, the Secretary of State will continue to use his powers of intervention selectively, in line with his call-in policy.
	The introduction of a new, free-standing green belt direction demonstrates the continuing importance that the Government attach to the protection of the green belt.
	Planning Policy Statement (PPS 25: Flooding)
	To strengthen the key role of the planning system in managing flood risk we are publishing for consultation:
	a new planning policy statement (PPS)25: Development and Flood Risk;
	a proposal for a flooding direction; and
	a proposal to make the Environment Agency a statutory consultee for planning applications in flood risk areas.
	The draft PPS25 strengthens and clarifies planning policy on development and flood risk to:
	ensure flood risk is taken into account at all stages in the planning process;
	avoid inappropriate development in areas at risk of flooding; and
	direct development away from areas at highest risk.
	The proposed flooding direction will provide greater scrutiny for major developments proposed in flood risk areas. Where local authorities intend approve applications that the Environment Agency still objects to, ODPM could consider whether to call them in for decision by a Minister.
	Making the Environment Agency a statutory consultee for planning applications in flood risk areas will reinforce implementation of PPS25 by ensuring that the agency is able to advise on all applications where flood risk is an issue.

Lord McKenzie of Luton: My right honourable friend the Paymaster General has made the following Written Ministerial Statement.
	The child and working tax credits are today benefiting over 6 million families and 10 million children. Tax credits tailor support to families' specific circumstances, providing more support when their need is greatest. They represent a more generous and inclusive system of income-based financial support than any previous system.
	Over the past seven years the Government have reformed Britain's tax and benefit system to achieve three overarching aims: to provide adequate financial incentives to work; to reduce child poverty; and to recognise the responsibilities of parenthood by supporting families with children. These reforms have helped make work pay and reduce the numbers of children in absolute poverty by one and a half million. Tax credits have been an important part of this success and they represent the best way to continue it in the future.
	In my Statement of May 26 I outlined six measures to improve the administration of tax credits. These aimed to improve HMRC's communications with tax credit recipients, reduce the risk of errors and improve the procedures for recovering overpayments. Significant progress has been made in each of these areas.
	Building on these improvements to the administration of the system, the Government are today announcing a package of further improvements most of which will come into effect over the next 18 months. The measures reflect the experience of the first years of operating the tax credit system and strike a balance between providing more certainty and stability of financial support for families, while maintaining flexibility to respond to changes in their income and circumstances. The measures also include clear responsibilities for claimants to report changes affecting their award.
	The tax credits system is an annual one—integrated with the tax system—within which payments can be adjusted to reflect changes in a family's circumstances and income. Under an annual system, given a family's final entitlement cannot be known until the end of the year, some level of end-year adjustment will be necessary. However, for some families, especially those on lower incomes, downward adjustments to tax credit payments—to reflect changes in circumstances reported within the year or when awards are renewed—can sometimes cause difficulties. This is a particular problem where claimants had not realised their payments were too high. Better communications, which is a key part of the measures announced on 26 May, will help by improving claimants' understanding of the system.
	Today's measures will improve matters further, providing greater certainty for claimants, especially those on lower incomes, through measures to reduce the need for adjustments caused by rising income and to limit the effects of adjustments. These are supported by measures to reduce the likelihood of unexpected downward adjustments resulting from inaccurate or out-of-date information about a family's income or circumstances.
	Analysis of overpayments suggests that they result from a number of factors: income rises from one year to the next; families overestimating the extent to which their income has fallen when they seek extra support during the year; provisional payments made at the start of the tax year, which are based on out-of-date information that is subsequently updated when the award is renewed; and delays in reporting changes in families' personal circumstances to HMRC.
	The improvements announced today will provide greater certainty for claimants, particularly those on lower incomes, while maintaining flexibility to respond to falls in income and changes in circumstances.
	To increase the flexibility of the system, from April 2006 there will be an increase in the limit on the amount that family income can rise over the current tax year without affecting tax credit entitlement for that year. The current annual income disregard of £2,500 will increase to £25,000. This will mean that, for instance, a family where a non-working partner moves into work on average earnings will not see their increased income lead to a fall in their tax credit entitlement during that year. This will maintain the incentives for people to move into work, while removing a major cause of the overpayments seen in the first two years of the system's operation.
	To provide greater certainty of award for claimants, from November 2006, automatic limits will be imposed on the extent to which tax credit payments can be reduced to recover higher payments in the earlier part of the year which could lead to an overpayment for the year as a whole. These limits will be set at the same levels at which overpayments from a previous tax year are currently recovered. This will guarantee that low- to middle-income families do not face large and sudden falls in their tax credit income, and reassure people who report changes promptly.
	To tackle the problem of families overestimating falls in income, from April 2007, when claimants report a fall in expected income during the year, their tax credit payments will be adjusted for the rest of the year to reflect their new income level, but will no longer include a one-off payment for the earlier part of the year. At the end of the year, their award will be finalised when their actual income is known. If they have been underpaid, a further payment will then be made. This approach will provide a buffer against any overpayment accumulated by the family during the year, especially where their estimate of income proves to have been too low.
	Today's measures will also give claimants clear responsibilities to report changes promptly and more regularly. They will be helped to keep their records up to date, including through more proactive contact by HMRC, allowing HMRC to base tax credit awards on the best possible information.
	In summer 2006 the deadline for providing information to finalise and renew tax credit awards will be brought forward by one month to shorten the period during which provisional payments may be made using out-of-date information.
	From November 2006, the range of changes reducing entitlement that must be reported to HMRC within three months will be expanded to include changes in work status or in the number of children for which the family can claim support. From April 2007, the time allowed to report such changes will be reduced from three months to one.
	In early 2007, towards the end of the tax year, HMRC will contact key groups of claimants to obtain more up-to-date income information on which to base the next year's payments while the finalisation process is completed. And from 2008–09, the income figure used in setting provisional payments will be uprated by average earnings where up-to-date information has not been provided.
	In line with their commitment when tax credits were announced in 2002, the Government have looked to learn from the early operation of the system and will continue to do so. Together these measures, and the six measures currently being implemented by HMRC, will lead to steady and ongoing improvements in the tax credits system, allowing it to deliver support even more effectively to millions of families. Without the changes announced today, initial estimates suggest that subsequent years' overpayments would be of broadly the same level as in 2003–04. When fully implemented, it is anticipated that today's changes will reduce the value of overpayments by around one third. I am still considering whether there is more that can be done to alert claimants about the recovery of an overpayment before HMRC starts to collect it but the scale of changes to the computer system that would be needed mean that this could not be done quickly.
	I believe that these further measures will help to ensure that tax credits strike the right balance between flexibility and certainty for claimants and give clear messages about the need to report changes to HMRC. They are a positive response to the issues raised by the Ombudsman and others and will go a long way to meet the concerns they have expressed.
	A case has been made for a system of fixed awards, which within the framework of the annual tax credits system, would need to be based on the previous year's income. The Government will continue to listen to the case, but believe on balance that it is preferable to maintain the current system that flexibly responds to changing circumstances.
	The PBR sets out the actions the Government are taking to continue improving compliance in the tax credit system. As announced on 2 December, as part of its ongoing compliance work, HMRC has identified and stopped attempts to defraud the tax credits system by making claims through the tax credits e-portal. HMRC has closed the e-portal while it develops new checks to ensure the system remains secure. A criminal investigation is also being undertaken into the apparent false use of a number of DWP staff identities in fraudulent tax credit claims. It would not be appropriate to make any further public statement at this stage. DWP and HMRC are carrying out an in-depth investigation into how this happened. They are also working quickly to identify the records concerned and to ensure they are corrected.